Question

Simmi and Sonu are partners in a firm, sharing profits and losses in the ratio of 3:1. The profit and loss account of the firm for the year ending March 31, 2020 shows a net profit of Rs 1,50,000. Prepare the Profit and Loss Appropriation Account by taking into consideration the following information:

1. Partners capital on April 1, 2019;
   Simmi, Rs 30,000; Sonu, Rs 60,000;
2. Current accounts balances on April 1, 2016,
   Simmi, Rs 30,000 (cr.); Sonu, Rs 15,000 (cr.);
3. Partners drawings during the year amounted to
   Simmi, Rs 20,000; Sonu, Rs 15,000;
4. Interest on capital was allowed @ 5% p.a.;
5. Interest on drawing was to be charged @ 6% p.a. at an average of six months;
6. Partners’ salaries: Simmi Rs 12,000 and Sonu Rs 9,000. Also show the partners’ current accounts.

Answer 1

Dr.			Profit and Loss Appropriation Account				Cr.
Particulars			Amount Rs	Particulars			Amount Rs
Interest on Capital				Profit and Loss Account			1,50,000
Simmi		1,500	4,500	Interest on Drawings
Sonu		3,000		Simmi		600	1,050
Partners’ Salaries				Sonu		450
Simmi		12,000	21,000
Sonu		9,000
Profit transferred to
Simmi’s Current		94,162	1,25,550
Sonu’s Current		31,388
			1,51,050				1,51,050

 

Dr.	Partners’ Capital Account				Cr.
Particulars	Simmi	Sonu	Particulars	Simmi	Sonu
			Balance b/d	30,000	60,000
Balance c/d	30,000	60,000
	30,000	60,000		30,000	60,000

 

Dr.	Partners’ Current Account				Cr.
Particulars	Simmi	Sonu	Particulars	Simmi	Sonu
Drawings	20,000	15,000	Balance b/d	30,000	15,000
Interest on Drawings	600	450	Interest on Capital	1,500	3,000
Balance c/d	1,17,062	42,938	Partners’ Salaries	12,000	9,000
			Profit and Loss Appropriation	94,162	31,388
	1,37,662	58,388		1,37,662	58,388